Ask Liz Weston

Get smart with your money

Liz Weston

Tuesday’s need-to-know money news

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Today’s top story: Are these 5 things worth credit card debt?
Also in the news: What Millennials should consider about life insurance, 5 gas-saving “tips” that don’t work, and what to tell high schoolers about money.

Are These 5 Things Worth Credit Card Debt?
Paying off your wedding on your 20th anniversary.

Life Insurance and Millennials — What to Consider Now
Looking and planning ahead.

These 5 Gas-Saving ‘Tips’ Don’t Work
You can leave the AC on.

What to Tell High Schoolers About Money
Thinking outside the box.

Monday’s need-to-know money news

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Today’s top story: 4 blunders to avoid when doing your own taxes. Also in the news: What to do if your W-2 is missing, 6 key investing concepts, and why there’s no such thing as a dumb question when it comes to money.

Doing Your Own Taxes? Pros Say Avoid These 4 Blunders
Getting it right the first time.

What to Do If Your W-2 Is MIA
You have options.

6 Investing Key Concepts — in Plain English
Understanding the basics.

Don’t Let the Fear of Looking Stupid Lead to Money Mistakes
There’s no such thing as a dumb question.

Q&A: A ‘poor man’s trust’ may be a poor estate plan

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Dear Liz: I am 85 and my wife is 76. We have a house free of mortgage worth about $1 million. We have market investments above $4 million and life insurance of $1 million. We do not have a trust, just a will. Our financial advisor says that we do not need a trust because we have named both of our grown children as beneficiaries on all of our accounts and on the deed to our house. Please advise us if a trust is needed in our situation or if we are fine the way things are set up.

Answer: If your financial advisor is an estate-planning attorney, he or she may be correct. Otherwise, you’d be smart to seek out a lawyer experienced in these matters to review what you’ve done.

Naming beneficiaries on financial accounts, and on deeds in states that allow that, can allow those assets to pass to heirs without going through probate. So-called transfer-on-death accounts and deeds are sometimes called “the poor man’s trust.” You’re far from poor, though, and a living trust may be a better option for distributing your wealth because there are many ways the current arrangement could go wrong.

The surviving spouse, for example, could change the beneficiaries. You both may be of sound mind now, but there’s no guarantee you’ll remain so. Fraud experts can tell story after story of caregivers, relatives, friends, advisors and romantic interests persuading a vulnerable older person to change beneficiaries in favor of the interloper. A living trust that bypasses probate can include language to prevent your children from being completely disinherited.

Another potential problem: paying funeral costs and the expenses of settling the estate. If everything does go to the kids at the survivor’s death, the executor may have to go after them to return some of the money.

This column isn’t long enough to detail all the other ways transfer-on-death arrangements can misfire, so you’ll want to make an appointment with an experienced estate-planning attorney soon.

Q&A: Building an emergency fund beats out building credit

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Dear Liz: I am trying to raise my credit scores, which are very low. I have one negative mark on my account from a paid collection and I just got my first secured credit card. I have a bit of extra money right now and I’m wondering what’s the best way to use it to raise my scores. Should I get another secured credit card from a different issuer, get a secured 12-month loan through my financial institution or something else?

Answer: People rebuilding their credit often overlook the importance of an emergency fund. Having even a small amount of savings can keep a financial setback, such as a decrease in income or an unexpected expense, from causing you to miss a payment and undoing all your efforts to boost your scores. You can start with just a few hundred dollars and slowly build the fund over time.

Adding an installment loan can assist with building credit as well, but a secured loan may not be the best option if money is tight. The cash you deposit with the lender as collateral for the loan won’t be available again until you pay off the loan. Consider instead a credit-builder loan, in which the money you borrow is placed in a savings account or certificate of deposit to be claimed when you’ve finished making the monthly payments, typically after one year. That means you can keep the cash you already have for emergencies. Credit-builder loans are available from some credit unions and Self Lender, an online company.

You’ll want to make sure both the credit card issuer and the installment loan lender are reporting your payments to the three credit bureaus. If your accounts don’t show up on your credit reports, they’re not helping to build your scores.

In addition to making payments on time, you’ll want to avoid using too much of the available credit on the card. There’s no bright line for how much to charge, but typically 30% or less is good, 20% or less is better and 10% or less is best. Use the card lightly but regularly and pay it off in full every month because there’s no advantage to carrying a balance.

Friday’s need-to-know money news

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Today’s top story: 2018 US Olympians open up about their money struggles. Also in the news: Tax forms to know about before filing your return, how to keep your tax preparer from hating you, and 10 cities where taxpayers receive the fattest refund checks.

2018 US Olympians Open Up About Money Struggles
Star athletes paid very little.

Tax Forms to Know About Before Filing Your Return
The most popular forms, explained.

How to Keep Your Tax Preparer From Hating You
Come prepared.

10 cities where taxpayers receive the fattest refund checks
Did yours make the list?

Thursday’s need-to-know money news

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Today’s top story: Why many consumers still #BankBlack. Also in the news: 3 reasons to choose a credit card over debit, how and why to use the Equifax free credit lock app, and how to review and dispute the salary data Equifax collects on you.

Here’s Why Many Still #BankBlack, Despite Fewer Options
Providing needed access.

3 Reasons to Choose a Credit Card Over Debit — and When Not To
Using your card strategically.

How and Why to Use the Equifax Free Credit Lock App
Locking your credit vs freezing it.

How to Review (and Dispute) the Salary Data Equifax Collects on You
Credit bureaus want your salary info.